Savient Creditor Tang Loses Bid to Bar Debt Deal
Savient Pharmaceuticals Inc., maker of the gout medicine Krystexxa, defeated a creditor’s bid for a court order blocking a debt transaction, allowing it to raise about $44 million and extend maturity on half of its debt.
Savient, based in East Brunswick, New Jersey, was sued April 30 by creditor Tang Capital Partners, an investment fund focusing on the life sciences, which contended the drugmaker is insolvent and asked a judge to appoint a receiver.
“With this transaction, Savient believes that its cash and cash equivalents provide sufficient liquidity for at least the next two years,” David Norton, the company’s interim chief executive officer, said in a statement today.
The transaction involves exchange of some notes for warrants and senior secured debt, cancellation of more than $100 million in notes and issuance of about $171 million in new notes, according to the statement.
For a Delaware Chancery Court hearing yesterday, lawyers for Tang said Savient “has no reasonable prospect of continuing its business successfully” and will be “cash-flow insolvent in short order,” according to court papers.
Tang asked Judge Sam Glasscock to block the re-capitalization transaction, saying it would hurt the company and stockholders. Glasscock denied Tang’s request for a temporary restraining order, according to court electronic records.
Tang objects to the company’s support of the new gout treatment, saying Savient’s only “significant” product is “an abject failure,” according to Tang’s complaint.
Savient is “gambling tens of millions of dollars in cash each quarter on an impossible dream,” San Diego-based Tang said.
Savient said in a February report to the U.S. Securities and Exchange Commission that “physicians may be reluctant to treat patients with Krystexxa because of the potential for extremely severe adverse reactions,” including allergic anaphylaxis, according to court papers.
The case is Tang v. Norton, CA7476, Delaware Chancery Court (Wilmington).
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